The government has for the third time in the year frozen all development projects as the cash crunch continues to bite and the State begins to eat from the pot of its own parastatals.
In a circular issued on Monday, all arms of government were also reminded to remit the Pay As You Earn (PAYE) and pensions for their staff without fail, a clear effort to help the Kenya Revenue Authority (KRA) shore up its collections.
Head of Public Service Joseph Kinyua named Treasury Cabinet Secretary Ukur Yatani as the only one with powers to okay major transactions by government agencies and parastatals, effectively taking over the powers of their boards.
“Further a moratorium is hereby issued placing in abeyance all capital expenditures until otherwise directed.
During the moratorium period, no capital expenditure is to be undertaken unless the capital expenditure is an ongoing project and is specifically approved in writing by the National Treasury,” reads the directive.
Kinyua’s directive is the second in four months after the one he gave in July with almost similar orders.
The latest directives come in the wake of revelations that the government coffers are bleeding.
A senior government official who sought anonymity told the Sunday Standard that the cash crunch was bad and several departments’ cars had been detained in garages over unpaid bills.
“For two months, most of the staff have not received their per diems during or after their trips, some departments have ended up taking government vehicles to garages where they can afford and are buying fuel using money from staff,” said the official.
And to ease the crisis, the government is now going for money held by State corporations to alleviate the situation as it struggles to finance its operations.
Among the firms that have remitted huge dividends are the Kenya Pipeline Company (KPC), which has returned Sh5 billion and Kenya Airports Authority (KAA) Sh12 billion.
On Friday, the Treasury also received Sh18.7 billion from the Kenya Ports Authority (KPA) as special dividends to the exchequer, the highest amount paid ever by a parastatal.
The agency that runs the country’s commercial ports and inland depots handed Sh18 billion saved over time and Sh700 million accrued interest from treasury bills.
Yesterday, KPA Managing Director Daniel Manduku said the total sum was wired to the exchequer on Friday. He said the amount was in addition to Sh6 billion handed to KRA.
“Yes we handed the said sum yesterday. KPA was able to not only pay its main shareholder a return in investment but also remit the highest among parastatals, we are proud,” said Manduku.
The government is also piling pressure on its parastatals to clear all the debts it owes suppliers and State organs and agencies are required to operate with prudence and financial discipline now more than ever.
According to Kinyua’s directive, the Treasury is expected to submit a report of the amounts remitted, indicating State corporations and agencies that would not have complied with the directive.
Clear all bills
They only have two weeks to clear all the pending bills.
“That the first charge on all exchequer releases, be the payment of outstanding payments due and owed to suppliers. All pending bills that have been cleared for payment be made immediately and not later than November 30,” reads the circular.
Kinyua also ordered the immediate withdrawal of any court cases between State agencies relating to disputes arising from projects or programmes funded through government resources, in favour of mediation facilitated by his office in conjunction with the office of the Attorney General.
Kinyua said the decision is informed by the need to expedite the implementation and accelerate the delivery of the country’s vision.
He said the administration was conducting a budget alignment exercise to provide the appropriate fiscal framework to guide the country’s sustainable development agenda.
[Additional reporting by Benard Sanga]